The claimant/appellant was employed by the respondent and under his original contract of 2005 he was guaranteed 20 hours of overtime a week, which was to be paid at time and a half of the normal hourly rate.

In 2016, the respondent negotiated with the Union of Shop, Distributive and Allied Workers (‘USDAW’) which reduced the amount for overtime. The contract of employment stated that collective agreements with USDAW would be given effect.

At first instance, the Employment Tribunal found that the agreement was incorporated into the claimant’s contract and paying the reduced amount for overtime was lawful. The claimant appealed this contending that the new agreement was not incorporated into his contract and as a result there was an unlawful deduction of wages.

The Employment Appeals Tribunal (‘EAT’) held that the decision of the Employment Tribunal was incorrect and that the Tribunal needs to consider whether every term of the new agreement was ‘apt’ for incorporation into the claimant’s contract.   The EAT relied upon the decision in Alexander v Standard Telephone & Cables Ltd (No 2) [1999] IRLR 286 when it was held that even if a document is expressly incorporated into a contract, if the term is inapt then it is not a term of the contract.  As the claimant had guaranteed overtime it was held that the terms relating to the pay for overtime did not apply.   Therefore, the claimant was successful in demonstrating an unlawful deduction from wages under the English equivalent of Article 45 of the Employment Rights (NI) Order 1996.

Practical Lessons

This case demonstrates that employers who are engaging in collective agreements should be aware that not every term of the collective agreement will apply to all employees.   The EAT is demonstrating that the individual’s circumstances have to be taken into account.  The fact that the claimant’s circumstances were rare (to the extent that he was the only employee out of 7,500 to have guaranteed overtime) did not alter the outcome of the case.

The wider learning point from this case is that an employer should consider whether the terms of a collective agreement will be, in the words of Hobhouse J (as he then was), in Alexander ‘apt’ to their situation and circumstances.  This may require some effort in investigating the individual contracts but greatly assists in ensuring that employees do not bring cases to the IT.
https://assets.publishing.service.gov.uk/media/5ce6d336e5274a487fc89865/Mr_J_Lozaique_v_Tesco_Stores_Ltd_UKEAT_0261_18_LA.pdf